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Networks, Options and Preemption

  • Mason, R.
  • Weeds, H.

This paper examines the irreversible adoption of a technology whose returns are uncertain, when there is an advantage to being the first adopter, but a network advantage to adopting when others also do so. Two patterns of adoption emerge: sequential, in which the leader aggressively preempts its rival; and a more accommodating outcome in which the firms adopt simultaneously.

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File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/workingpapers/2008/twerp575.pdf
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Paper provided by University of Warwick, Department of Economics in its series The Warwick Economics Research Paper Series (TWERPS) with number 575.

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Length: 37 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:wrk:warwec:575
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  18. Fernando Alvarez, 1999. "Social Mobility: The Barro-Becker Children Meet the Laitner-Loury Dynasties," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(1), pages 65-103, January.
  19. Eckstein, Z. & Mira, P. & Wolpin, K.I., 1997. "A Quantitative Analysis of Swidish Fertility Dynamics : 1751-1990," Papers 22-97, Tel Aviv.
  20. Karine S. Moe, 1998. "Fertility, Time Use, and Economic Development," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(3), pages 699-718, July.
  21. Palivos, Theodore, 1995. "Endogenous fertility, multiple growth paths, and economic convergence," Journal of Economic Dynamics and Control, Elsevier, vol. 19(8), pages 1489-1510, November.
  22. Eckstein, Zvi & Mira, Pedro Solbes & Wolpin, Kenneth, 1998. "A Quantative Analysis of Swedish Fertility Dynamics: 1751-1990," CEPR Discussion Papers 1832, C.E.P.R. Discussion Papers.
  23. Katz, Michael L & Shapiro, Carl, 1986. "Technology Adoption in the Presence of Network Externalities," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 822-41, August.
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  26. Patrick Bolton & Christopher Harris, 1999. "Strategic Experimentation," Econometrica, Econometric Society, vol. 67(2), pages 349-374, March.
  27. Joseph Farrell & Garth Saloner, 1984. "Standardization, Compatibility and Innovation," Working papers 345, Massachusetts Institute of Technology (MIT), Department of Economics.
  28. Jay Pil Choi, 1994. "Irreversible Choice of Uncertain Technologies with Network Externalities," RAND Journal of Economics, The RAND Corporation, vol. 25(3), pages 382-401, Autumn.
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